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WASHINGTON — Faced with embarrassing revelations about withheld evidence, the Justice Department on Wednesday moved to reverse the conviction of former Alaska Sen. Ted Stevens, who lost his bid for re-election just days after a jury found that he had lied about gifts and home renovations.

Justice Department lawyers asked a judge to dismiss the indictment against Stevens and toss out his conviction — effectively killing their own courtroom victory with a shocking admission of misbehavior by prosecutors.

The Stevens case, the government's highest-profile attack on congressional corruption in recent years, was plagued by problems that continued to pile up even after a jury found him guilty. The last straw, apparently, was the failure of prosecutors to turn over notes of a crucial interview in which a witness contradicted a statement he made later under oath at trial.

"I have determined that it is in the interest of justice to dismiss the indictment and not proceed with a new trial," Attorney General Eric Holder said. He said the department must ensure that all cases are "handled fairly and consistent with its commitment to justice."

The prosecutors who handled the trial have been removed from the case and their conduct is under investigation.

Stevens is expected to be back in court Tuesday when U.S. District Judge Emmet Sullivan holds a hearing on the government request. Stevens had appealed his conviction and had been awaiting sentencing.

Video: U.S. seeks to drop Ted Stevens case
"I always knew that there would be a day when the cloud that surrounded me would be removed," Stevens said in a statement. "That day has finally come. It is unfortunate that an election was affected by proceedings now recognized as unfair."

Stevens, 85, had held the Senate seat since 1968. Alaskans voted by a narrow margin to oust him last November, ending a political career that began before Alaska was granted statehood. When he was defeated, Stevens was the longest-serving Republican senator.

While reaction in the Senate was muted, Sen. Lisa Murkowski, R-Alaska, called the whole episode grossly unfair.

"I am deeply disturbed that the government can ruin a man's career and then say, 'Never mind.' There is nothing that will ever compensate for the loss of his reputation or leadership to the state of Alaska," Murkowski said.

Stevens was convicted of seven felony counts of lying on Senate financial disclosure forms to conceal hundreds of thousands of dollars in gifts and home renovations from a wealthy oil contractor.

In their court filing Wednesday, Justice Department lawyer Paul O'Brien told the judge they recently discovered prosecutors' notes from an April 2008 interview with Bill Allen, a key witness against Stevens. The notes indicate that Allen said he did not recall talking to a mutual friend about giving Stevens a bill for work done at the senator's home in Alaska.

Yet when he testified at the trial, Allen claimed he did have such a conversation. Under trial rules, such contradictory statements must be given to the defense team, and they weren't.

The trial was beset by similar government missteps, infuriating Sullivan. He held Justice Department lawyers in contempt in February for failing to turn over documents as ordered and called their behavior "outrageous."

The judge had ordered Justice to provide the agency's internal communications about a whistle-blower complaint brought by an FBI agent involved in the investigation. The agent objected to Justice Department tactics during the trial, including failure to turn over evidence and an "inappropriate relationship" between the lead agent on the case and the prosecution's star witness.

Stevens' lawyer, Brendan Sullivan Jr., praised Holder as "a pillar of integrity" for his decision to disregard a jury verdict that they said was obtained unlawfully. He called the prosecutors' behavior "stunning."

"They were hell-bent on convicting a United States senator," Sullivan said. "His name is cleared. He is innocent of the charges as if they had never been brought."

William Canfield, a former Stevens staffer and longtime friend, said some of the trial's effects may never be undone. Specifically, he said, at least one Senate colleague — John Sununu of New Hampshire — lost his bid for re-election after Stevens' legal problems became a campaign issue.

Still, Canfield said, the Justice Department decision is an admission that "they failed miserably in an attempt to bring him down based on some crazed notion of him being corrupt."

The Justice Department decision was first reported by National Public Radio.

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